Unemployment hits 7.2%, highest in four years

Kranti Malladi I hyderabad

What was once seen as a sure bet, the IT sector is now experiencing a downturn, with employability reaching an all-time high. According to the latest report from hiring platform Instahire, unemployment among IT professionals in urban areas has risen from 6.4% to 7.2%, highest over the past four years. The reasons: Hiring is now confined to specialized tech roles such as AI, cloud migration, cyber security, and generative AI.

The report notes that average hiring in IT companies has stagnated. Mid-tier IT firms, in particular, have seen a sharp drop in average intakes. Layoffs are predominantly occurring in these mid-sized companies, the report reveals. Notably, while major companies added an average of 5,000 employees in the second quarter of 2025, this figure is projected to plummet to just 709 in the same period of 2026.

The turmoil in the IT sector has prompted companies to abandon large-scale campus recruitments. Hiring is now confined to specialized tech roles such as AI, cloud migration, cyber security, and generative AI. This shift means even qualified candidates are struggling to secure positions. According to TeamLease Digital estimates, graduates in science, technology, engineering, and mathematics (STEM) fields are bearing the brunt. Although 40% of STEM graduates are eligible for jobs, only 15-20% are actually getting hired.

Greyhound Research indicates that several firms could eliminate up to 50,000 jobs in the coming quarters due to automation and performance realignments. Amid these challenges, demand is surging specifically for freshers skilled in artificial intelligence.

Upskilling inevitable

Tech experts opine that the present circumstances necessitates a focused push toward skill development. In the current harsh landscape, seizing opportunities in IT requires acquiring proficiency in high-demand courses. Even without immediate openings, deep understanding of AI applications, domain expertise, and adaptability to technological advancements can pique companies' interest. Notably, training in AI, automation, and machine learning from the student phase onward is already yielding jobs for freshers. In this context, professionals with prior experience are advised by experts to upskill in AI and machine learning courses.

The report underscores a broader transformation in the IT ecosystem. Once a beacon of mass employment, the sector is now pivoting toward niche, future-proof skills. The pre-pandemic boom saw rapid expansions, with companies like Infosys, TCS, and Wipro onboarding tens of thousands annually through campus drives. But the 2020 downturn, exacerbated by global economic ripples and remote work shifts, triggered cost-cutting measures. Fast-forward to 2025, and the integration of generative AI tools like ChatGPT has accelerated automation, rendering routine coding and testing roles obsolete. Mid-tier players, often service-oriented firms with thinner margins, are hit hardest—facing client attrition to AI-driven efficiencies.

Still, glimmers of hope persist. Sectors like fintech, healthcare, and e-commerce are ramping up investments in secure, scalable tech infrastructures, creating pockets of demand. For instance, cyber security roles have seen a 30% hiring uptick, per Instahire data, as data breaches escalate. Cloud migration projects, vital for digital transformation, similarly favor certified experts.

For India's 5 million-plus IT workforce, the message is clear: stagnation is risky. Platforms like Coursera, Udacity, and LinkedIn Learning offer accessible AI bootcamps, often endorsed by giants like Google and Microsoft. Government initiatives, such as Skill India, are aligning curricula with industry needs, but individual initiative remains crucial. A mid-career developer shared anonymously: "I pivoted to GenAI six months ago; my salary jumped 40% despite the slowdown."